Although ad technology has continued to show incremental gains over the last 10 years, the flat and passive viewing experience of the ad format has not. But the flat, 2D, and passive viewing experience of banner ads and video may finally be facing an epic shift. Consider, for example, the nearly tripling of AR use for advertising in 2021 to $141B  , the use of 3D models for e-commerce that can increase purchasing by 250%, and the rise of VR-based E-sport competitions. These new formats are multi-dimensional, responsive, capable of creating new audience reach and changing how we shop online. 

Consider too, the evolution of the “smart” phone with now dozens of built-in sensors that can detect movement, pulse, and geo-location creating new consumer data. When your combine all of this with the growth in blockchain and the IoT it doesn’t take much imagination to see that we are on the cusp of a major brand-consumer disruption. 

One such disruptor that may be closer than we think is the “smart ad”: ads that locally gather consumer data and then modify the content to be more personalized to the viewer. Smart ads are different from other ad units because they don’t simply “ping” back confirmations, but open up a two-way communication with the consumer that is capable of passing massive amounts of data back and forth throughout the ad’s life cycle. Information that can be shared with networks, advertisers, publishers or even to other ads. 

When compared to network consumer data tracking, in-ad technology has three big advantages, a) it can track direct consumer engagement with the content, b) it can create a direct 1:1 relationship without an intermediary, and c) in-ad tech can reduce or eliminate fraud and privacy issues as data is only transmitted between the consumer and the advertiser.

The era of the smart ad however, doesn’t just change how brands engage with consumers but the very epicenter of where ad intelligence resides. The ability to track, report, communicate, and respond to data from inside the ad also puts the advertiser in control, giving them direct control over data reporting, retargeting, and content optimization. With more data flowing through the ad unit itself, control over data will move away from the networks, DSPs, SSPs, and exchanges and to the advertisers – possibly rendering ad network and exchange data obsolete.  

A critical piece to the success of smart ads, however, is the ability to leverage new media content like 360, 3D, VR, and AR. Being multidimensional and responsive to natural human movement, these new immersive ad formats create significantly higher levels of organic interactivity that generate critical behavioral data. Behavioral data needs consumer interactivity and something most traditional, flat 2D ads have not been able to create, try as many have. 

Behavioral data is key to predicting consumer behavior because it reflects real, actual human actions as opposed to what you may say in surveys or focus groups. Although industry professionals don’t foresee VR and AR headsets hitting critical mass for several more years, smartphones are a different story. Of the nearly 6 billion smartphones worldwide most if not all support 360, 3D, VR and AR content. In fact, it is said that currently the largest selling VR headset in the world is the smartphone (i.e., phones can be placed inside inexpensive – even disposable – VR headsets for a surprisingly good VR experience).  

But, if the pathway to monetizing VR and AR headsets starts with the mobile phone, then the end point is the Internet of Things. The IoT has been talked about for several years but with 5G and well “smart” everything (i.e., kitchens, cars, homes, wearables, cities, and more) the connectivity of smart-everything isn’t very far away, and at the cross roads of Immersive Media and the IoT things we enter the era of the “smarter” ad, or AI ads: ads that are not only highly intelligent (i.e. the data the capture and what they can do with it) but can communicate with each other across multiple devices creating a highly personalized brand experiences for consumers at nearly every moment of their life. 

This “lifestyle” form of advertising changes the entire ad module because it moves it from push to pull. Consumer behavior, interest, and values now determine what, where, when and how they receive information from brands. Only the brands that can bring value to our lives, make our lives more productive, enjoyable, efficient, or more comfortable are going to be welcomed into our personal space. Lifestyle advertising is the natural evolution of the way we are already engaging consumers with advertising. For example, until 2004 advertising was a one way street in which we interrupted consumers talking “at” them in order to try and get them to listen. With social media, advertising evolved to a conversation where brands talked with consumers not only about value but also their lives. With lifestyle advertising, we go from shouting at people, to talking with people, to now being an integral part of their daily lives. 

Although brand controlled lifestyles is still many years off, the pathway for the smart ad has already been laid. Companies like Advrtas are helping build ad technology that already allows advertisers to deliver immersive ads anywhere across the ad eco-system while preserving data inside the ad, and allowing the existence of smart ads to take root. Moving control of the brand consumer relationship away from the broken programmatic universe of networks, exchanges, and platforms will drive the ad models of the future because they insure more rewarding consumer experiences, more brand control, and less fraud and privacy issues. The dawn of the smart ad has a bright future because it allows marketers to connect directly with consumers on a 1:1 basis creating an ongoing personalized experience is no longer interruptive but integral to their daily life.